That Facebook would do this, if in fact they are, should come as no surprise. Oculus Rift has been around for a few years, and Facebook slashed its price by half over the past four months. Rift also has to be plugged into a high-end Windows PC to work, and main competitors Google, HTC, Lenovo, and Samsung have all announced their own standalone VR headsets for launch later this year.

A few other bits from Gurman’s report bear some quick analysis:

The new headset will have a similar interface to Samsung’s VR Gear and can be controlled by a wireless remote. Facebook has said it’s also working on a prototype device code-named Santa Cruz that’s basically a wireless Rift, with the full power of the original device sans PC.

Two tiers: The original Rift, perhaps soon with a wireless upgrade, for developers and enthusiasts, and; The new standalone model for more casual users.

Oculus has plans to enlist China’s Xiaomi and its network of contract manufacturers to produce the new headset for global distribution, people familiar with the arrangement said. The device will feature Oculus branding around the world, except a custom version for China will feature Xiaomi branding and run some Xiaomi software applications, the people said. Hugo Barra, recently put in charge of Oculus’s VR products, was previously a Xiaomi executive. Xiaomi declined to comment.

Fascinating. Makes sense. Makes me feel cynical. China is a huge market and Xiamoi is beloved there like Apple is in the US.

The device’s gaming power is superior to that of the Gear VR, but unlike the powerful Rift device, will not include positional tracking technology. This means that the device won’t be able to tell where its user is spatially, which is useful for tasks like virtual rock climbing.

Again, two tiers: Rift/Wireless Rift will retain positional tracking for roomscale use. The new headset will be cheaper, portable, and simpler to operate, if not quite as immersive.

A future version of the product will have that technology, according to a person familiar with the plans.

Person familiar with the plans always says that…

The company plans to begin briefing content makers, such as video game designers, on the device by October so that the product’s application store could launch with compatible games, one of the people said. The downloads store will be re-written and accessible from the virtual reality interface itself, this person said.

That first sentence is smart business and shouldn’t be surprising. It’s what Apple’s doing with ARKit right now, and how you do a good platform launch in 2017.

The second sentence is, in a nutshell, the key to why the coming class of consumer-level standalone headsets has a chance at really taking off. Pro VR rigs like Rift and HTC Vive are expensive and complicated for the casual user to setup and maintain. Phone-based VR systems like Gear VR and Google Cardboard are cheaper and easier to dive into, but they’re based on a user experience originally designed for touch screen computing, not immersive computing.

I’m pretty experienced with consumer gadgetry, and phones in particular. I still get frustrated and run into road blocks using Gear VR with my Samsung Galaxy phones. VR puts a ton of strain on a phone’s CPU, GPU and battery, and running VR software atop a phone’s base OS can lead to all kinds of issues. System-level notifications interrupting a VR experience can ruin the effect. Background apps eating up resources can bring your VR environment crashing to a halt, period.

A task-specific VR rig running hardware and software built for nothing else should theoretically be much easier to use than a VR layer woven into a phone’s stack. Much will depend on the quality of user experience, starting with the Oculus store. It’s not bad currently, but it needs to be simpler and offer more (optional) hand holding for novices if Facebook really wants their new headset to make waves.

Facebook Inc. is taking another stab at turning its Oculus Rift virtual reality headset into a mass-market phenomenon. Later this year, the company plans to unveil a cheaper, wireless device that the company is betting will popularize VR the way Apple did the smartphone.

…

Facebook’s new headset is designed to bridge the gap — a device that will sell for as little as $200 and need not be tethered to a PC or phone, according to people familiar with its development. It will ship next year and represent an entirely new category.

Code-named “Pacific,” the device resembles a more compact version of the Rift and will be lighter than Samsung’s Gear VR headset, one of the people said. The device’s design and features aren’t finalized and could still change, but the idea is that someone will be able to pull the headset out of their bag and watch movies on a flight just the way you can now with a phone or tablet.

I actually picked up a Rift and a Gear VR earlier this week. Both have impressed me so far (in a very small amount of use). Rift, in particular, is a nice piece of kit. It’s lighter and more comfortable to wear than its closest competitor, HTC. I’m really curious to see how small and comfortable Facebook-Oculus can make a standalone unit.

Facebook’s new VR handset will ship in 2018 so will miss this year’s holiday shopping season, giving rivals a chance to hit the market first. But the $200 price and Oculus’s reputation among developers could give the gadget an edge with consumers.

I bet that Samsung Exynos VR system will also run Facebook-Oculus’ platform, and it could beat Facebook to market this year (I have no idea). But having covered Samsung through the first decade of the smartphone wars, I wouldn’t put it past them to pivot away from Oculus and launch their own VR store.

And I wouldn’t put it past Facebook to have already nudged them firmly in that direction. Which would be shrewd as hell, right?

4. Advance the tech enough to build your own consumer-grade headset. Set the price bar super low ahead of time to screw with hardware competitors. Because you can, because you’re Facebook and have all the cash.

Yet despite many pronouncements that 2016 was the year of VR, a more apt word for virtual reality might be absence. Of the 6.3m headsets that were shipped last year, most were cheaper, less sophisticated devices, such as the Samsung Gear VR, that rely on smartphones to act as their screens, according to SuperData, a games-market research firm. Only 200,000 high-end Oculus Rift headsets were sold globally (see chart). In the end, SuperData revised its first forecast, made in January last year, that total revenue from VR software and hardware would reach $5.1bn in 2016, down to $3.6bn. The actual figure for total worldwide revenue was a meagre $1.8bn.

Here’s the aforementioned chart:

Chart by Superdata Research, via The Economist

I’d never heard of SuperData before reading this Economist post. That doesn’t mean anything — I’m not particularly up on who’s who in the world of gaming business analysis. A quick visit to SuperData’s website was notable for several prominent grammatical errors amidst the copy marketing their consulting services. Again, may not mean anything. Just passing along the very little I know about them before saying the following:

When an analyst says their own forecast was off by 275% — especially when that margin represents $3.1 Billion — I’m not sure that’s an indictment of the industry they’re trying to analyze. Seems like it’s at least worth considering whether the industry underperformed or the analyst did.

I agree with Williams in that there was a lot of VR-related noise last year. I started getting involved with consumer-grade VR in 2015 when I hosted a panel on AR and VR for Salesforce Developers at Dreamforce. I spent some time ahead of the conference with a Samsung Gear VR and Kodak 360 camera, and checked out an Oculus Rift-based experience at the show itself. Google Cardboard was also a thing that year.

And Palmer Luckey was on the cover of Time that August. Luckey, of course, is no longer CEO of the VR company he founded. But that’s how it goes when you sell your startup for $2 Billion.

The story accompanying Luckey’s infamous cover photo included this paragraph:

Headsets will start going on sale this year, and competition will increase dramatically through 2016. At first they’ll be bought by hardcore gamers and gadget geeks. They’ll be expensive–as much as $1,500 with all the accoutrements. And just as with cell phones, everyone else will mock the early adopters for mindlessly embracing unnecessary technology with no useful purpose. At first.

We’re past that stage, if barely. Useful purposes for VR have emerged. They’re just not mainstream. VR is most useful to gamers and niche users across health care, industry, research, and training. Prices of consumer VR headsets have dropped some, but an Oculus with the necessary PC to run it will still set you back right around $1,500, minimum. As the chart above shows, Superdata is forecasting year over year growth of VR headset sales in 2017, but the numbers are still quite small.

So what?

VR is a long play. Everyone involved knows that. Tons of money is being invested in the VR ecosystem by tech industry giants betting on it becoming one of the pillars of a new wave of immersive computing. These companies have the resources to invest and don’t need to realize immediate returns.

Facebook (owns Oculus), Google, Samsung, and Sony are all big players in VR’s early stages but none of them relies all that heavily on headset sales for revenue right now. Intel, Lenovo, and Qualcomm are slightly smaller players, and they, too, make their bread and butter elsewhere. Apple and Microsoft get mentioned with the terms “Augmented Reality” and “Mixed Reality” more than VR, but let’s mention them, too: They don’t need to sell headsets to keep chugging along.

That basically leaves HTC. HTC probably has the most to win or lose when it comes to VR’s near-term success. Once a darling of the smartphone world, the company has struggled to generate meaningful profits from their phone business in a market dominated by Apple and, to a lesser extent, Samsung. While they still sell phones, HTC’s future lies in something else. For the time being, that something else is their Vive VR headset.

HTC has sold other assets to fund its VR focus, and their need to generate meaningful revenue from this new line of business is more immediate than what their competitors face. But even if Vive “fails” and HTC is forced to close up shop, the VR business itself isn’t going anywhere even if headset sales don’t grow meaningfully over the next few years. (And don’t get me wrong, I’m rooting for HTC; they made some of the best smartphones in the world ten years ago, and Vive is arguably the best VR system on Earth today.)

That said, we’re on the brink of a transition from VR’s earliest days to the beginnings of mainstream VR. All of the VR hardware action to date has been at the extreme ends of the price spectrum, plotting out a barbell curve with super cheap headsets (Cardboard, Gear VR) on one end and super expensive headsets (Rift, Vive) on the other. A new wave of standalone VR rigs offering more power and ease of use than today’s cheap stuff, but in simpler, less expensive form factors than today’s expensive stuff, will launch by year’s end. Google, HTC, Lenovo, and Samsung have already shown their intentions. Facebook/Oculus just jumped on the train today, too, according to this Bloomberg report.

As technology and production techniques improve, and consumer preferences mature, the VR industry will mature. Too much has been invested, and too many big players are excited, for VR to fizzle out now. Ignore the short-term projections and anxiety and play the long game. The Virtual Reality industry is barely in its adolescence.

Oculus just announced a sale on their Rift + Touch bundle. For a limited time (six weeks, starting today), you can pick up the bundle for $399 USD. That’s a $200 savings.

The new pricing also represents a 50% savings, or $400, from the same bundle’s $798 price only four months ago.

Note that the new sale pricing only applies to the bundle. Purchased separately, the Oculus Touch controllers are still $99. This is all being marketing as part of the company’s Summer of Rift promotion, which features sale prices on a wide selection of games and other content, as well.

Without getting too far into reading tea leaves, all available data points to two possible reasons for the price cut:

1. Oculus hasn’t sold very many Rifts. VR headsets generally haven’t sold well, with the possible exception of Samsung’s Gear VR. I say possible because many of the units Samsung has moved have been freebies thrown in with the purchase of a new Galaxy smartphone.

2. The impending launch of standalone VR headsets from HTC, Lenovo, and Samsung spells significantly increased competition for mindshare and early install base capture. Oculus is doing what they can to bring new users into their ecosystem now, before these new platforms hit the market later this year.

We already knew HTC and Lenovo were prepping Android-based standalone VR headsets for launch later this year. By standalone, I mean “you don’t need to snap your smartphone into the goggles.” Surprise, surprise, Samsung’s working on a standalone VR rig, too.

A company called Visual Camp spilled the beans on Samsung’s Exynos VR, a forthcoming headset that will apparently use Visual Camp’s eye-tracking technology. Like Google’s standalone Daydream View rigs, Exynos will not only let you keep your phone free for other uses, it’ll also enable advanced VR features that a phone-based setup just can’t handle.

The Exynos VR is a headset with a built-in display, a smartphone-like processor, and all the other tech you need for virtual reality applications.

It looks like the latest version is the Exynos VR III, which features a 10nm hexa-core processor with two Samsung M2 CPU cores clocked at 2.5 GHz, four ARM Cortex-A53 CPU cores clocked at 1.7 GHz, ARM Mali G71 MP20 graphics, and dual WQHD+ displas with a screen refresh rate of 90 fps (or a single 4K/75Hz display).

In addition to eye-tracking, the Exynos VR head-mounted display is said to support “hand tracking, voice recognition, and facial expression recognition.”

Assuming Exynos VR supports the Oculus store like Gear VR does, this is pretty exciting. Oculus has a big headstart over Google’s Daydream store when it comes to available content to make those virtual reality glasses come alive.